Saturday, May 14, 2011

The Wire, in Real Life

Brendan Kiley covers a two-year sting operation on the attendees of an afterhours party spot by the Seattle Police and FBI( h/t The Dish):
Around 8:40 a.m. on March 30, 2011, four years after the investigation began, four men show up at the King County Courthouse to face charges for violating RCW 9.46.220, the state law regulating "professional gambling in the first degree." A few reporters are taking notes and tweeting the proceedings. They are here to see the "speakeasy defendants" who've been all over the local papers and blogs, guys arrested for throwing parties where people drank after-hours and played cards. In the past 10 years, according to the prosecutor's office, King County has pressed charges against only one other person for violating RCW 9.46.220. It's a law that the government doesn't seem to care that much about. After all, from Seattle you can drive 20 miles south to Tukwila or 10 miles north to the Drift On Inn Roadhouse Casino on Aurora Avenue and gamble legally.
But these four men (all of them, I later learn, poor—if they really were "professional gamblers," they were lousy at it) are being prosecuted for the crime of playing poker somewhere between Tukwila and Shoreline with the wrong guy, an undercover cop.
The defendants are quiet, well dressed, and bewildered by the charges. One of them told me that the poker stakes were so low, he would lose or win $100 at most in the course of a night. ("All those guys were broke, broke as a joke," Mia Brown agrees. "They'd borrow five dollars from someone to go put on the card table. It was small and it was stupid.")
The defense lawyers will be bewildered by what they find in the discovery process—all the paperwork and evidence and audio and video surveillance accumulated by the two-year investigation that involved the FBI, SPD, SWAT teams, and federal firearms and immigration and customs agents. One defendant's discovery request turned up nearly 2,000 pages of documentation and over 100 CDs and DVDs, and even that defendant's attorney had to file extra requests because he said there were big gaps of time missing.
Why did law enforcement dedicate such massive resources to bust some penny-ante card players for charges that only one person has faced in the past 10 years?
One of the defendants, Brady McGarry, had a simple explanation: "If you spend that much time and money, you have to put somebody up on that cross."
This investigation shows how much more thoughtful and professional fictional detectives on The Wire were in comparison to actual police.  It is amazing that a police officer would spend so much time getting to know so many people who were so insignificant.  Too bad actual police won't spend so much time busting crooks on Wall Street or big money guys who use campaign contributions to get policy changes which make them tons of money.

More Blog Difficulties

Several of the posts which disappeared and then reappeared came got reposted today when I edited them to clean up the labels for the posts.  I didn't mean to do that. Sorry.

John Boehner is Full of Crap or Stupid

Steve Benen thinks he means what he says (via Mark Thoma):
But that’s not what this is about. The House Speaker is presenting an economic vision based on fantasy, confusion, and lies. The man simply has no idea what he’s talking about.
Marcus, Bloomberg, and Chait walk through a striking list of bizarre errors of fact from Boehner. He said the economy will be worse off if the debt ceiling is raised without massive cuts. He thinks the Recovery Act “hurt” the economy. He believes the public sector is “crowding out” private investment. Boehner’s certain the economy “never” grows after a tax increase. He’s convinced Fannie Mae and Freddie Mac “triggered the whole meltdown” of the U.S. financial system.
These claims aren’t just wrong; they’re ridiculous. It has nothing to do with Democrats vs. Republicans, or left vs. right. This is Boehner vs. reality.
At an almost instinctual level, the political establishment tends to strongly resist this. I more or less understandable why — considering Boehner’s rhetoric at face value, and assuming he means what he says, is almost terrifying to think Boehner is so painfully confused.
But here we are. We’re left with the discomforting fact that it appears the Speaker of the House, Congress’ most powerful official, when dealing with the nation’s most important issue, is functionally illiterate, bringing the sophistication of a slow child to the debate.
I am stunned to talk to everyday people who believe what Republicans say.  Either the Republicans are completely ignorant and blind to reality, or they are the biggest, most conscience-free shills for rich assholes who like to screw over people who aren't as lucky and crooked as them (or both).  I haven't decided which is the case, but I'm leaning more and more toward ignorant.  Ten years of tax cuts haven't helped the economy.  All the banks (especially the investment banks) are responsible for the housing boom and bust.  The stimulus stopped the economic freefall.  All of that is obvious to anyone with eyes in their head.  Arguing against this is faith-based argument.

Naked Capitalism Link of the Day

Today's link: McMansions dead at last? The kind of homes we'll build in the future, at Slate:
The increase in demand for rental housing has reinvigorated the apartment market, and some new construction has begun. What if people get used to renting? Owning single-family houses represents a long-established tradition that the U.S. shares with many countries (Canada, Australia, the United Kingdom, Ireland, the Netherlands, Norway), but 10 years is long enough for traditions and behavior to change. It is likely that in the future multifamily housing will represent a larger share of the American housing market than the one-in-five new dwellings that has been the historic norm. What about single-family houses, which will still remain for many people the home of choice? There is some evidence that urban townhomes and infill housing are more popular, as rising gas prices increase the cost of commuting. Higher energy costs also affect heating and air conditioning, which may have the effect of discouraging homebuyers from purchasing large houses with soaring entryways and expansive family rooms. While the evidence is fragmentary—the current reduction in average new house sizes has more to do with the preponderance of first-time buyers than an overall shift in demand—it is clear that the long recessionary cold-shower will dampen the exuberance that characterized the boom years of 2000 to 2005. That will mean smaller houses closer together on smaller lots in inner suburbs, fewer McMansions, and fewer planned communities in the distant hinterland. An alternative scenario is that American optimism will prevail and it will be business as usual, as happened during the boom of the 1950s following the Great Depression, or during the period following the Energy Crisis of 1973, when car buyers, after a brief flirtation with Japanese compact cars, embraced minivans and SUVs. But I wouldn't count on it.
Development in the 1990s and 21st century was the worst thought-through waste of money in history.  As oil supply becomes tight, sprawling suburbs will be cursed by all.

Gingrich Throws His Oversized Ego Into the Ring

Matt Taibbi on Gingrich announcing his presidential candidacy (h/t The Dish):
Purely from a political-theater standpoint, Gingrich brings several really outstanding qualities to this race. For one thing, he’s a legit threat to win the nomination. He wouldn’t be in any normal year, but when the field is Donald Trump, Michelle Bachman and Rick Santorum, anyone who can successfully lick a postage stamp without an instruction booklet is going to be a contender.
I can't believe that a single political party could come up with so many pathetic candidates for president, and yet they have.  It is going to be a very entertaining year-and-a-half.  And yet, if the economy tanks again, something I think is a very real possibility, one of these bozos may get elected.  That is not entertaining at all.

A Season Before War

From the SI archive, Steve Rushin remembers baseball in 1941, the season before major league ballplayers joined the war effort:
In 1941, Joe DiMaggio traveled across the country by coal-fired locomotives and signed autographs with a fountain pen and stuck his arm out the window of his automobile (even in the dead of winter) before hanging a left, because his was an age before turbojet engines and ballpoints and turn signals. He played baseball in flannel pajamas, in stifling heat, and was cooled in clubhouses by an oscillating fan or a bottle of Ballantine's, kept cold in an icebox that was literally that—a block of ice in a wooden box. Co-incidentally, on the night 60 years ago that DiMaggio's 56-game hitting streak ended in Cleveland, fans presented Indians manager Roger Peckinpaugh with a marvelous modern convenience: It was described, in the next day's New York Times, as an "electric refrigerator."
Ted Williams hit .406 in '41 without benefit of Palm Pilot, PlayStation or Nokia 8260. Nor did he enjoy homogenized milk, fluoridated water, central air, credit cards, fast food, TV or peace of mind. Consider: On May 15 of that year, when DiMaggio's streak began, Vichy France announced its collaboration with Nazi Germany. On July 17, the day the streak ended, the Nazis' second assault on Russia climaxed with nine million men engaged in fighting on that front. ARMY SELECTEE STARTS DRAFT OF 21-YEAR-OLDS, announced Page One of that day's edition of the Times. The Streak, meanwhile, was eulogized in Sports with but a single story.
All of which is to say—without going too Tom Brokaw on you—that '41 witnessed our greatest generation of ballplayers. True, baseball was not yet integrated, but DiMaggio and Williams alone engineered twin towers of achievement that no player has since scaled. They did so before expansion, chartered flights or steroids, when neither the ball nor the batters were juiced. In essence, these men were slapping matzoh balls off the centerfield wall with arms they developed the old-fashioned way: by signaling turns, in the dead of winter, out the window of a '39 Packard.
In this age of the all-volunteer army, it is hard for me to imagine a time when major league athletes, let alone everyday middle-class citizens, were drafted into the armed forces.  I carry around a 1943 steel penny to remind myself of a time when fighting a war meant that the general public made sacrifices.  I guess that is a time long-gone.

The Amazing Growing Lake

Devils Lake in North Dakota, a glacial depression which is slowly filling up with water:
The lake itself is not shocking. In fact, to eyes like mine, seeing it for the first time, it looks unremarkable, benign even—flat, blue, shallow around the edges. What's unnerving are the signs that the land beneath was dry not long ago. Every few miles along the highway, a cross-street leads straight into the blue, the yellow center lines almost beckoning drivers to follow and submerge. In the town of Minnewaukan, just past D Avenue, Main Street itself disappears into the water.

Around the corner, the playground in front of the local school awaits the water without defense. The football field across the street is already gone, transformed into a wetland with little mounds of grass where marsh birds nest. A wire cage still stands where the baseball diamond was, but on a Saturday afternoon in April, the only people near it are a man and a woman in rubber boots—fishing......

The problem is that it has not stopped. Unlike with a river flood, this water does not naturally recede after a week or a month. It has nowhere to go: The lakebed is the result of a glacier that melted roughly 10,000 years ago, and its only natural outlet is at 1,458 feet above sea level. Since August 1992, the lake has risen more than 29 feet. That would be a remarkable increase in nearly any body of water, but in the context of North Dakota's famously flat topography it is extraordinary; here, the rising lake spreads across the land like water spilled on a table. At the lake's current size, a one-foot rise consumes more than 15,000 acres of surrounding land. In 19 years it has grown from roughly 69 square miles to 285, an area about the size of Fort Worth, Texas.

In recent years the lake has become so massive that it has begun a sort of self-perpetuation through its influence on the local weather. The body of water adds so much moisture to the lower atmosphere that it may well be increasing the amount of precipitation the area receives. And on summer nights in Minnewaukan you hardly need the A/C anymore. Nice for sleeping, perhaps, but the cooler air means less evaporation, more standing lake.

One of those tough springs

Well, so far we've planted about 140 of our 400 acres of corn, and about 50 of our 400 acres of beans.  None of those fields has been in optimal condition, and I've considered quitting what I was doing a number of times.  Probably 20% of the acres should not have been planted at all if we didn't have a ten day weather forecast showing eight days with a chance of rain.  Hopefully things work out for the best.

The one thing I have to remember is that things are a lot better here than in other places.  No matter how frustrated I get when putting in the crops, people along the Mississippi, in Japan and lots of other places have things a lot worse.  I'm doing a job I love, don't have to answer to anybody, and have to take into consideration that the last three years have been amongst the best ever.  I don't have to commute to work, deal with angry clients or get into petty struggles with co-workers (other than dad).  Plus, a little adversity once in a while builds character.  Overall, things are pretty good.

Was the Auto Bailout Worth It?

David Kiley says yes (via Ritholtz):
The GAO is merely doing its job as watchdog on government spending. Even though the benefits are clear, there are still plenty of pundits and politicians who have doubted the value and propriety, even the constitutionality, of the government bailouts of the two automakers two years ago. Two years in, and they are still complaining. Critics are entitled to their ideology about letting free markets determine the fate of private companies. But the White House and auto companies should not have much trouble defending the wisdom of not letting GM and Chrysler, representing more than a quarter of the U.S. auto industry, collapse into liquidation, which would have created chaos and vast unemployment in the most important manufacturing industry remaining in the U.S.

Both automakers are here today, building cars, mostly in the Midwest, and re-hiring thousands of workers, because the U.S. government kept both companies, in the midst of the meltdown of financial markets in 2008 and early 2009, from being chopped up piecemeal. The rescue of the two automakers also kept hundreds of auto parts companies from going bust. The U.S. auto industry is still the spine of the economies of Michigan, Ohio, Indiana, as well as being important to other states including Pennsylvania, Illinois and Kentucky.

In all, the Center for Automotive Research (CAR) in Ann Arbor, Mich., reckons the government's bailouts of the U.S. auto industry spared more than 1.14 million jobs in 2009, and prevented "additional personal income losses" of nearly $97 billion in 2009 and 2010. Another 314,400 jobs were saved in 2010. The research organization based its conclusions on the potential impact of auto-industry collapse for jobs at U.S. automakers and suppliers, and ripple effects on the economy at large.

The legion of critics of the bailout is quite a gallery: from Presidential hopefuls Rep. Michele Bachmann (R-Minn.) and Mitt Romney (let's see if he sticks to that when he campaigns in Michigan this year) to the more thoughtful, if still stubbornly incorrect, Dan Ikenson, associate director of the libertarian Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies.
Of all the decisions made during the financial crisis, this was probably the most controversial.  I don't see how they could have let GM and Chrysler go under at that time.  It wasn't ideal and it wasn't pretty, but I think it worked out for the best.  If those two companies failed, and they dragged down a bunch of parts suppliers with them, we'd have had a tremendous mess on our hands.  As the article goes on to say, the banks weren't healthy enough to try to finance GM and Chrysler as they entered bankruptcy, so the government was the lender of last resort.

Naked Capitalism Link of the Day

Today: Capitalists Who Make vs. Capitalists Who Take, by Dylan Ratigan:
Looking today at our economy, it’s difficult to see who is creating that higher level of value.   Companies pump up their near-term income by accounting tricks, pump up stock prices for shareholders, without creating real value, all of which has had a hugely negative effect on our global economy.
Umair Haque, is at the forefront of pushing for a new way of looking at what, and how, we grow our economy.  He says:
We have a problem — you know, what is this crisis really about? Is it a debt crisis? Is it a liquidity crisis? I think it’s deeper. It’s a crisis of real value creation and we seemed to kind of have hit the limits of our ability to create real value. And for me, real value is what I call “thick value.” And that’s a little bit analogous to what Michael Porter has recently called “shared value.” For me there are three pillars of real value. It has to be sustainable. It can’t go up in a puff of smoke next year like it happened with the banking crisis. It has to be meaningful, that is, it has to reflect real tangible benefits to people on the other side of the transaction of the relationship. And I think that it has to be authentic.
It’s easier to make money in the short-term through exploitation and the extraction and much more labor intensive with a higher failure rate and a much greater degree of challenge to actually advance and create something that is new and different and differentiates in its creation of value.  “So to me, this is a crisis that is about failing to create real value, but it is a crisis of our institutions.  And it’s a crisis that is of things like GDP and corporate profits, and the ways in which we measure and conceive of income.  And so to really get to grips with this crisis, I think we have to begin by taking a cold hard look at those things,” says Umair.
This is an extremely important distinction which should be made.  Much of the growth in GDP in the finance sector is just extracting rents from others.  That is not productive.  When people trumpet private sector activity over government spending, you must ask what value is gained.  Private profit which doesn't increase value doesn't gain society anything.  Infrastructure investment isn't being maintained, and further privatization won't improve that in most cases.  We need to refigure such issues.

Selling Out

As 2010 drew to a close, the mayor of Newark, N.J., was staring into a budget abyss so deep that he sold 16 city buildings to pay the bills. They included the architecturally significant Newark Symphony Hall and the police and fire headquarters. In New York, the transit authority may sell its Madison Avenue headquarters, complete with an underground tunnel connected to Grand Central Terminal and air rights to build a skyscraper on top.
And soon, if state legislators have their way, private investors will be able to buy plenty of other municipal treasures: power plants in Wisconsin, prisons in Louisiana and Ohio and municipal buildings in Boston.
The Great Government Tag Sale is on. As states and cities struggle with billions of dollars in shortfalls, elected officials are increasingly selling public assets to cover their costs. Sometimes municipalities sell the buildings to pocket a one-time pile of cash and then lease them back so they can continue to use them.
This is pathetic.  We are going to get screwed by private investors who buy these properties, because too many people just hate government.  Taxes on the state and federal level keep getting slashed to help out the people who don't need help, while everybody else has to pay more.  This will not end well.

Morganza Spillway to be Opened

Probably today:
Rains in the Midwest have swollen the Mississippi River, and National Weather Service officials are predicting crests not seen since the Great Flood of 1927. Opening up Morganza would take pressure off river levees in Baton Rouge and New Orleans, but could send 5 to 25 feet of floodwater down steam to seven parishes, with some of the deepest waters near St. Francisville, west Terrebonne and Morgan City, according to the U.S. Army Corps of Engineers.
Terrebonne Sheriff Vernon Bourgeois said the corps told him as many as 17,000 structures and 4,500 people in Terrebonne could be in the path of floodwaters. Lafourche officials did not return phone calls Monday evening inquiring if they had similar numbers.
“We’re facing yet another historic challenge,” Jindal said Monday in a meeting with local officials at the Port of Morgan City. “Someone asked me, ‘How many once-in-a-lifetime events can we face?’ I’ve given up counting. But I know the people of Louisiana are resilient and we’re going to get through this.”
Col. Ed Fleming, commander of the New Orleans District of the Corps, asked the Mississippi River Commission for permission to open the Morganza spillway structure over the weekend. The Bonnet Carre spillway was opened Monday and will remain open for at least two weeks

Naked Capitalism Link of the Day

From Friday: The People vs. Goldman Sachs, by Matt Taibbi:
They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial.
It is a very interesting read, although Taibbi is known to go to some extremes (even though I agree with him, some people think the vampire squid is an overstatement).  It is clear that Goldman knew they were selling shit to their clients, and yet they sold them anyway.  Somebody should go to jail.

Friday, May 13, 2011

Blog Difficulties

Apparently Blogger had some difficulties and wiped out a number of posts from yesterday.  I may or may not be able to remember what I put up, and will put what I can up.  Also, I'm mudding in some crops, so I might be busy.

Update: Posts are back.

Thursday, May 12, 2011

A Thought Experiment

What would Republicans in Ohio be saying if casino owners (or any other business) went Galt because Democrats were trying to change the rules of the game while the casinos were under construction:

The developer of casinos in Cincinnati and Cleveland announced Wednesday that they halted construction on both projects.

The developer, Rock Ohio Caesars, said construction would be suspended immediately in both cities.

According to Rock Ohio Caesars, the developers have disagreed with Gov. John Kasich and state legislators over plans to tax casinos' gross receipts without deducting winnings and payouts.

The developer issued a statement that said recent legislative discussion proposing significantly higher taxes and fees specific to the operation of Ohio's casinos have "created an environment of uncertainty concerning the projected economic vitality of our planned developments in both Cincinnati and Cleveland."

According to the statement, construction would remain suspended "until these issues have been resolved and a reliable State economic environment is in place."
Imagine how much Republicans would be howling about how Democrats were destroying jobs and placing ridiculous regulations on business.  I think the casinos are crying foul over nothing, but I think it is an interesting thing to think about.  Republicans had ample opportunities since the first time a casino issue appeared on the ballot in 1990.  They probably shouldn't have waited until 19 months after the casino issue passed to try to change the rules.  Even if the casinos don't win, the state is going to have to pay to fight the inevitable lawsuits from the developers.

Mississippi Flooding in Pictures

35 photos at The Atlantic:

Floodwater engulfs a farm after the Army Corps of Engineers blew a massive hole in a levee at the confluence of the Mississippi and Ohio Rivers to divert water from the town of Cairo, Illinois, on May 3, 2011 near Wyatt, Missouri. The diversion flooded about 130,000 acres of Missouri farmland and 100 homes in the state. (Scott Olson/Getty Images) #

Western Kansas Drought Takes Toll

From Morning Edition:

ERIC DURBIN: There are parts of the Midwest that have received more rain in a single day than huge tracts of Kansas have seen since last fall. That's when farmers here planted hard red winter wheat. That's the wheat primarily used for making bread. The drought covers significant portions of Kansas, Texas and Oklahoma.

The Wheat Quality Council's annual wheat tour recently cataloged the crop and estimated a harvest almost 30 percent less than last year.

Farmer Jason Ochs walks through a field of yellowish-green wheat stalks almost two-feet tall. While in the field, Ochs gets word of another Hamilton County farmer whose fields were appraised at only three bushels per acre, 27 bushels below the county average.

Mr. JASON OCHS (Farmer): They won't even take that to harvest at that point in time. They'll tear it up and start conserving moisture for the next crop, as far as that goes. I've seen - or heard of several thousand acres where that's happened.

DURBAN: Dean Stoskopf is a former Kansas Wheat Commissioner. He says weather patterns over the next several weeks could potentially swing harvesting totals here by as much as 50 million bushels either way. But even if it rains now, farmers will still see low yields, and Stoskopf says that will show up in the price of bread, although not as much as you might expect.

Mr. DEAN STOSKOPF (Former Kansas Wheat Commissioner): The fluctuation from actually the amount of wheat that goes into a loaf of bread doesn't change a whole lot. We could have a really reduced crop, and from the wheat side of that, maybe a couple cents a loaf of - for bread.
3 bushel per acre.  That would be two semi loads from a full (640 acre) section.  That is very hard to imagine.

Wednesday, May 11, 2011

The Elephant in the Room

It's nearly impossible to cut the deficit entirely on spending cuts.  Especially when the Bush tax cuts would cause most of the future deficit if they are extended like John Boehner and Republicans want:

 Chart via Andrew Sullivan

Boehner and the Republicans need to get their heads out of their asses and face up to the fact that the Bush tax cuts are stupid.

Andrew quoted Ezra Klein's explanation:
Extending the Bush tax cuts over the next 10 years, which Boehner favors, will increase the deficit by twice as much as the $2 trillion in spending cuts he's calling for will reduce the deficit.
These guys have no business being in government.  A vote for them is a vote to destroy our society.

Chicken Manure Tax Credit

Are folks in the Grand Lake St. Mary's watershed using this:
You don’t believe there’s spending in the tax code???  Here’s a real life example:  the chicken-s**t tax credit.  Really, section 45 of the Internal Revenue Code.  You can look it up.  The late Senator Roth of Delaware (home of lots of chickens and “poultry manure,” as it’s euphemistically called) put this little goody into our tax laws.  Here’s the backstory:  the EPA said that enormous chicken farms could no longer put their poultry waste in pools or bury it because it poisoned the ground water.  One of the best options to meet the new requirement was to dry the vile effluent and burn it to make electricity, but that was still costly.  Roth didn’t want chicken farmer profits to plummet or chicken and egg prices to rise just because farmers couldn’t use the earth as a giant toilet, so he pushed through the chicken s**t tax credit to create a profitable market for that (as well as all sorts of other crap).
There are lots of chicken s**t tax subsidies.  The mortgage interest deduction is basically a housing voucher for rich people.  Those who really need help get bupkes.  The tax-free health insurance you get at work is heavily subsidized by the tax code, but those with low incomes rarely get health coverage and, if they do, the subsidy is worth little or nothing.  The ethanol tax credit is a farm price support program  that is literally starving people.
I am glad Republicans are around to stand up for multinational oil companies when evil Democrats try to take away their tax credits ($21 billion dollars over 10 years).

Naked Capitalism Link of the Day

Today's link: Brokerage rip-off datapoint of the day, by Felix Salmon:
A lot of people have signed up for Wikinvest and handed over access to their brokerage accounts. I spoke briefly to SigFig founder Parker Conrad, who explained that it’s incredibly easy to flick through those accounts and come up with examples like the one he pulled up, of a man with $2.3 million in his Merrill Lynch account.
This guy probably knows that he’s paying his Merrill broker an annual management fee of 1.75%, which alone is more than $40,000 a year. But he doesn’t know that other Merrill clients in his position are paying far less — that Merrill brokers basically charge as much as they can, and the average Merrill client on Wikinvest pays less than half that, just 85 basis points.
And there are other things this guy doesn’t know, as well, because they’re buried in his statements — things like the fact that Merrill charged him $5,763 to make 24 trades last year, over and above that $40,000 management fee. That’s about $240 per trade.
Other fees are even higher. The Merrill broker bought something called the Fidelity Advisor International Capital Appreciation Fund, which charges 1.45% per year on top of a 5.75% fee payable when you buy the thing in the first place. The fund is substantially identical to the Fidelity International Capital Appreciation Fund, which has a 1% management fee and no front-loading at all. Why would any advisor with his client’s best interests at heart put that client into FCPAX rather than FIVFX? He wouldn’t — FCPAX is simply a vehicle invented by Fidelity for advisors which allows them to skim off hefty commissions.
Wall Street is full of crooks.  They should be taxed much more than they are.  They are ridiculously paid thieves and contribute nothing of value to society.

Torture Doesn't Work in Gathering Intelligence

Who should one believe, Dick Cheney or people who actually interrogate people?  Barry Ritholtz:
Virtually all of the top interrogation experts – both conservatives and liberals (except for those trying to escape war crimes prosecution) – say that torture doesn’t work:
Army Field Manual 34-52 Chapter 1 says:
“Experience indicates that the use of force is not necessary to gain the cooperation of sources for interrogation. Therefore, the use of force is a poor technique, as it yields unreliable results, may damage subsequent collection efforts, and can induce the source to say whatever he thinks the interrogator wants to hear.”
• The C.I.A.’s 1963 interrogation manual stated:
Intense pain is quite likely to produce false confessions, concocted as a means of escaping from distress. A time-consuming delay results, while investigation is conducted and the admissions are proven untrue. During this respite the interrogatee can pull himself together. He may even use the time to think up new, more complex ‘admissions’ that take still longer to disprove.
I think it is a sign of how far the Republican party has sunk that we are even discussing this subject.

John Kasich Hates Public Schools and Local Governments

From the Dispatch:

 In a suburban Cincinnati facility where tooling for engines used by the military is made, Gov. John Kasich unleashed a volley of verbal missiles at Ohio's nursing-home lobby yesterday. Kasich, whose speech was scheduled as an event to stump for his two-year, $55.6 billion budget proposal, also said that if the state holds the line on spending this year, "we will have a tax cut next year."

The governor declined to disclose the type or amount of tax cut after his speech. He has in the past floated the idea of eliminating Ohio's income tax.
In other words, if schools and local governments manage to cut their budgets this year, we will consider making them cut them again next year.  Expect more and more local tax increases.  John Kasich appears to be trying to set himself up for a run for president in 2016 by showing how much he slashed government spending as governor.  He won't mention that he just passed the tax burden from wealthy folks in the suburbs, who can easily afford to maintain their schools and local government, to the poor folks in rural areas and inner cities who can't afford anywhere near the same level quality of schools and government services.  Previously, state government served as an equalizer, but apparently, no more.  The Worthingtons and Dublins won't even notice that the rest of the state is being left behind.

Vermont Takes a look at Single-Payer Healthcare

Dave Weigel takes a look at the plans in Vermont, and gives a little Canadian background:

The people who want America to adopt a single-payer health care system like to tell a story. It's about how universal care had a demo in one of Canada's less populous provinces, where it proved so popular and successful that the rest of the country couldn't help but copy it. "Saskatchewan was the first province in Canada to get universal health care," said Rep. Jim McDermott, D-Wash., outside Capitol Hill on Tuesday. "The most beloved Canadian is Tommy Douglas, who started it."
In the early 1960s, under Premier Tommy Douglas, the rural Canadian province introduced something like Medicare that covered everyone. Panic and protests ensued. The province had to import doctors temporarily to cover for the ones who'd gone on strike. But the plan worked. It was popular. By the end of the decade, all of Canada had the plan. And in 2004 Douglas was named the "greatest Canadian" in a poll, surging past Wayne Gretzky, Pierre Trudeau, and the bassist from The Tragically Hip. So that part's not hyperbole, either.
I can only imagine the conservative gloating if doctors went on strike in Vermont, even if the storm passed and the program spread.  If my healthcare treatment is going to be determined by either a for-profit corporation or a government, please give me the government.  It is time to have a real discussion about health care, the status quo is broken, but half of the United States does not want to admit it.

And So It Begins

Yesterday's rain dried up as it reached us, so today we're going to get started, just slightly less than a month behind schedule.  A couple of the neighbors got started yesterday, but we held off to see what the rain did.  At this point, I don't want to get in too big of a hurry, because we only have about 60 acres ready to go, and the weathermen are still calling for rain everyday.  Posting may be sporadic as I try to do a little work.

Update:  Nothing but hiccups thus far.  If I meet the designer of the valve on our starter fertilizer pump, I'm going to punch him in the neck.

What Economics Brings to the Table

Edward Glaeser, highlighting what he sees as the role of economists, as he finishes his stint blogging at Economix (via Mark Thoma):
Economics marries a predilection for personal freedom with a longstanding tendency to view the interests of the government as being distinct from the welfare of the people. Adam Smith’s “Wealth of Nations,” modern economics’ founding document, emphasized that point.
In the 18th century, it seemed clear that what was good for King George III was not necessarily good for Britain and certainly was not necessarily good for his American subjects.
Democratic revolutions muddied the waters and made it possible for some to think that the government was a faultless servant of the people’s will, but a healthy skepticism about the benevolence (and competence) of the state continued within economics.
Both markets and governments are quite imperfect, and it is important to weigh their failures against each other.
The world isn’t and shouldn’t be run by economists — many perspectives need to be at the table. But economists have plenty to add: formal models, statistical evidence, a focus on freedom and a sophisticated centuries-old approach to public policy.
Can't really argue with that.  Too bad economists argue like surveyors.

Tuesday, May 10, 2011

A Bullish Trend

Mark Hulbert says the ECRI WLI indicates fears of a double dip recession, like I was voicing, are wrong (via Ritholtz):
 A double-dip recession? More like double-dip sloppy thinking.
No, I’m not saying that all of those advisers who believe another recession is imminent are automatically guilty of sloppy thinking. But many of them are: When the facts on which they base their argument end up changing, they simply look elsewhere to find other facts that support their conclusion.
They remind me of the famous line with which Adlai Stevenson, the Democratic party candidate for president in 1952 and 1956, used to mock his opponents: Here’s the conclusion on which I base my facts.
I hope he's right.  Only time will tell.

Ohio More Dangerous Than U.S.-Mexico Border

So says CQ Press (h/t John Cole):
Rep. Silvestre Reyes smacks down the Orange Man.
Speaker Boehner should focus on controlling the level of violence in his own state before tarnishing the image of border communities that remain among the safest places to live in America.  As his office asserts that Congress cannot consider reforming our broken immigration system until border violence is under control, the fact remains that the six largest cities in Ohio all have higher rates of violence and crime than every major city along the U.S.-Mexico border.  In fact, the Speaker's own district in Dayton, Ohio saw more homicides in 2009 and 2010 than Texas' four largest border cities combined, despite the fact that Dayton's population of 141,500 is only about one-tenth of the size by comparison.
And the greater violence in Ohio spans all categories:
According to the most recent City Crime Rankings Survey by CQ Press, Ohio's cities have higher rates of violence and crime in every category, including murder, rape, robbery, aggravated assault, burglary, and motor vehicle theft than border communities.
The data:
Murder Rate (National Rate = 5.0 Murders per 100,000 Population)
15. Dayton 25.5
25. Cleveland 20.0
34. Canton 16.6
35. Cincinnati 16.5
69. Toledo 11.3
72. Columbus 10.9
87. Akron 9.7
117. Laredo 7.5
250. San Diego 3.1
252. McAllen 3.0
292. Brownsville 2.2
292. Yuma 2.2
305. El Paso 1.9
Cities Ranked by Highest Rates of Crime (400 total)
7. Cleveland
20. Dayton
22. Washington, D.C.
24. Cincinnati
27. Toledo
37. Canton
47. Akron
49. Columbus
144. Laredo
204. Yuma
221. San Diego
275. El Paso
291. McAllen
304. Brownsville

And what is really amazing is that the murder rate in Dayton was much higher in the 1970's than it is now.  I think the murder rate peaked in 1974.  It is amazing what 24-hour news does to your mind.

Crows Are Too Damned Smart

From a story about the U.S. military considering using crows to locate Bin Laden (h/t the Dish):
The idea of using crows to find the world's most wanted man was based on the work of John Marzluff, a wildlife biologist at the University of Washington who has been studying crow behaviour for over 20 years. Working with a population of wild American crows on the university campus in Seattle, Marzluff and his colleagues noticed that birds which they had previously captured seemed to be wary of them and were harder to catch.
The researchers therefore decided to investigate the possibility that crows can recognize human faces, and devised a relatively experiment using rubber masks. They went out on campus and in the surrounding areas wearing either a 'caveman' mask or a Dick Cheney mask. Those who wore the caveman mask caught and banded between 7 and 15 crows on each excursion, but those who wore the Dick Cheney mask did not. 
In the following months, they went out wearing the same masks, walking around  the university campus in pre-determined routes without bothering the crows. They also recruited volunteers to do the same. The crows consistently harassed anyone they saw wearing the caveman mask, scolding them with loud squawks and even mobbing them.
This happened regardless of the size, sex or walking style of the person wearing the mask., and even when the mask was partly hidden under a hat or worn upside down. They were, however, indifferent to the neutral mask - when they saw both masks simultaneously, they would ignore the person wearing wearing it, and instead follow the person wearing the caveman mask and scold them aggressively.
They always disappear when I grab a shotgun, and they sure seem to communicate well with each other. 

What Happened to Sarah Palin?

Joshua Green goes back to Sarah Palin's fight against the oil companies in Alaska, and asks what might have been:
Let’s stop here and go back for a moment to the convention speech—the alchemic moment of excitement and fantasy when Sarah Palin became the star of national politics. Listening to it today, you can practically hear her shift registers, the state figure morphing into a national one, the old Palin becoming the new. She touches on the pipeline, the corruption, how she broke the oil companies’ “monopoly on power” and ended a “culture of self-dealing.” But all of that is overshadowed by the full-throated assault on Barack Obama, rooted in deep cultural resentment, that became the campaign’s ethos and remains Palin’s identity. What resonate are her charges that Obama wanted to “forfeit” the war in Iraq and that he condescended to “working people” with talk of “how bitterly they cling to their religion and guns.”
That didn’t carry her to Washington, but it did reshape the contours of American politics. Today, there aren’t many Republicans of the type Palin was in Alaska; but nearly every Republican seeking the White House strives to evoke the more grievance-driven themes of her convention speech. Regardless of whether she runs too, her influence will be more broadly and deeply felt than anyone else’s. But it’s hard to believe that her party, or her country, or even Palin herself, is better off for that.
What if history had written a different ending? What if she had tried to do for the nation what she did for Alaska? The possibility is tantalizing and not hard to imagine. The week after the Republican convention, Lehman Brothers collapsed, and the whole economy suddenly seemed poised to go down with it. Palin might have been the torchbearer of reform, a role that would have come naturally. Everything about her—the aggressiveness, the gift for articulating resentments, her record and even her old allies in Alaska—would once more have been channeled against a foe worth pursuing. Palin, not Obama, might ultimately have come to represent “Change We Can Believe In.” What had he done that could possibly compare with how she had faced down special interests in Alaska?
I am violating my original rule of not mentioning Sarah Palin unless she announces a run for President, which I made on my first day of blogging.  I think she may have come up in an aside on a post or two, but I generally haven't followed her soap opera.  I think this article is definitely worth reading, as it presents an interesting portrayal of Alaska, the oil industry and Sarah Palin's amazing, really, accomplishment in taking on her own party and  Big Oil.  I think it is interesting when mentioning the convention speech that he also doesn't mention the mantra of that convention, "Drill, Baby, Drill."  Somehow, the ultimate slogan of obsequiousness to Big Oil became the rallying cry most often voiced by the one opponent of the industry in Alaska that beat them.  Unfortunately, the former governor's personal flaws and biases combined with her competitive nature to undermine all that she actually did accomplish.  I think Joshua Green's article title is correct, "The Tragedy of Sarah Palin."  The whole thing is worth reading.

The Best Outfield of All-Time?

Robert Creamer made the case for the 1890's Philadelphia Phillies:
The best outfield ever to play in the big leagues was a remarkable trio that spent five seasons together, a long time as outfields go, on the Philadelphia Phillies in the 1890s, way back in baseball's Dark Ages. Before you dismiss that best-outfield claim as the raving of a hidebound antiquarian, consider the exploits of Del. Big Sam and Sliding Billy.
Del was Ed Delahanty, the leftfielder, who was named to the Hall of Fame in 1945. Delahanty, 6'1", 170 pounds, was an accomplished outfielder graceful enough to play the infield when he was needed there. He was a remarkable hitter whose lifetime average of .346 is the fourth highest of all time; only Ty Cobb, Rogers Hornsby and Shoeless Joe Jackson have surpassed it. Delahanty was a righthanded power hitter, a crowd pleaser. In 1893 he excited the Philadelphia fans one day by hitting two long "foul home runs" to left in the ninth before clouting a bases-clearing triple off the centerfield fence. "The tumult was kept up for such a length of time as to make it absolutely necessary for Umpire Gaffney to stop the game for a while," reported the Philadelphia Public Ledger. "The spectators acted like maniacs; they jumped and danced around, threw straw hats, coats, canes and umbrellas in the air and yelled at the top of their voices..."
One day in Chicago in 1896 Delahanty hit a home run in the first inning, singled in the third, hit another homer in the fifth and another in the seventh. When he came to bat in the ninth, the Chicago fans were shouting, "Line it out. Del! Make it four!" He responded by hitting one onto the clubhouse roof in left for his fourth home run of the game.
Big Sam was Sam Thompson, the rightfielder, who was named to the Hall of Fame in 1974. He was 6'2" and weighed 207 pounds, huge for his day. Thompson, a lefthanded hitter (lifetime average: .331), was a slugger who in the 12 seasons from 1885 through 1896 finished first, second or third in the National League 37 times in such batting categories as average, hits, doubles, triples, homers, slugging percentage, total bases and RBIs. His career total of 129 home runs was a league record that stood for 25 years. In 1887, he led Detroit to its only National League pennant, batting in 166 runs; the second man in the league had 104. Thompson had more RBIs per game in his career than any other player in big league history, including Babe Ruth and Henry Aaron—.92 per game for Big Sam, compared to .88 for the Babe and .70 for Hank. Thompson led the league's outfielders in assists one year and is credited with popularizing the one-bounce throw to home plate. Previously, outfielders had depended on infielders to relay the ball. Thompson didn't play big league baseball until he was 25 and was 31 when the great outfield came together.
Sliding Billy was Billy Hamilton, the centerfielder, who was named to the Hall of Fame in 1961. He was built like a tree stump: 5'6", 165 pounds, with thick legs. He was a lefthanded singles hitter, and his lifetime average of .344 is seventh on the alltime list. Hamilton was the fastest man in baseball in the 1890s, an outfielder with great range and a base runner who earned his nickname by making headfirst slides 70 years before Pete Rose came on the scene. He led the National League in bases on balls five times, in stolen bases seven times and seemed always to be racing across home plate. He scored 1.06 runs per game during his career, still the major league record. In 1894 he had 192 runs, another enduring record.
Unfortunately for Delahanty, he is often times remembered for dying by falling into the Niagara River while drunk, and drowning.  As Creamer notes, the 1894 Phillies had 4 outfielders hit over .400.

Being Catholic and Republican

Daniel Larison looks at Rick Santorum and analyzes the intersection of religious and partisan beliefs:
At the Republican presidential debate on Thursday Rick Santorum was asked about Indiana Gov. Mitch Daniels’s suggestion that there be a social truce. Santorum answered, “Anybody that would suggest we call a truce on moral issues doesn’t understand what America is all about.”
That is wrong. In fact, it’s the precise opposite of what America is about. ~Jennifer Rubin
They’re both wrong in different ways. America is not “about” anything in the way that these two mean it. America isn’t a creedal or proposition nation, and it isn’t an idea or an ideological project. Genuine constitutional conservatism is worthwhile, and it involves more than Berkowitz’s warmed-over fusionism, but it isn’t reducible to individual liberty or limited government, and one cannot claim that America is “about” either of these things. Despite their wishes to the contrary, Christian and especially Catholic conservatives cannot correctly attach moral or religious significance to the founding principles of a Whiggish republic.
What I will say in Santorum’s defense is that he has made this mistake because he considers moral issues, especially those that concern the protection of life and family stability, to be vitally important to a healthy and flourishing culture. At times, Santorum seems to want to argue that eternal verities and pre-political loyalties should take priority in how we organize our society and our polity, and he is probably one of the few Republicans to have held federal office recently to understand that obligations to a community and the common good are not the same as accepting the encroachment of the state. Then he often veers off on some strange militaristic tangent or, as he did the other night, endorses the use of torture on detainees, because he has already made the earlier mistake of attaching too much significance to the nation-state. That in turn leads him to support measures that directly contradict the moral principles that he normally defends. Santorum’s views are the unfortunate mish-mash that results from combining Catholic social teaching with Americanism and militarism, as the latter two tend to overshadow anything interesting that Santorum might have to say from his understanding of the former.
There are a lot of significant points which can be made about this subject.  Daniel pursues how pro-life voters became enmeshed in a bargain with the international interventionalist in support of wars which run counter to their moral values, and how the culture war is a way for the war hawks to co-opt the social conservatives to their war views. 

I think it is interesting to look at how Democratic and Republican Catholics cater their views about which social teachings by the Church are important to follow based on their party's interests.  Democratic Catholics are more likely to support gay marriage,labor unions, the legality of abortion and welfare programs, while being opposed to the death penalty and the war in Iraq.  Republican Catholics often want bans on gay marriage and abortion, destruction of unions, an end to welfare programs and support both the death penalty and the war in Iraq.  It seems like political platforms trump Church teaching nearly every time.  Not exactly a good trend for the stability of the Catholic Church in America.  I would guess that is a contributing factor to making "Former Catholic" the second largest "religious group" in the United States.

Update:  I neglected to mention torture.  Santorum explicitly supported the use of torture on detainees during last week's debate.  Daniel mentioned it, and I hate to leave it off the list of positions against Catholic teaching which Republicans have embraced.

Naked Capitalism Link of the Day

Today is an excellent set of links.  I'm going to highlight two, because they are both significant agriculturally, but there are excellent links to an awesome sky survey, an investigation of corruption in Southern Illinois courts, concern that Fukushima is as bad as, or worse than Chernobyl, a report on Bahrain's Sunni government demolishing Shiite mosques, an interesting history of the removal of the gold indexation clause in debt contracts in the Great Depression, and several other interesting stories.

The first link I'll highlight is Unnatural Selection: Wily Weeds outwit herbicides, at New Scientist:
The weedkillers atrazine and simazine were introduced in 1958. Ten years later, a plant nursery in the US that had been regularly using the pesticides reported that they were no longer effective against a plant called common groundsel – the first confirmed case of herbicide resistance.
Half a century on, the number of known strains of resistant weeds stands at 357 and counting. "Herbicide resistance is a fantastic example of evolution in response to human-induced selection pressure," says Stephen Powles of the University of Western Australia in Perth, who studies the problem.
Because of its huge commercial importance, a lot of money is spent studying the problem and in many cases we know exactly how plants are evolving resistance. The mechanisms range from changes in leaf shape or waxiness to reduce herbicide uptake, to mutations that prevent herbicides binding to the proteins they target.
Strategies such as alternating the type of herbicide used can slow the evolution of resistance, but it is not foolproof. Many weeds have developed resistance to more than one herbicide. In some cases, this is due to plants evolving resistance mechanisms that are effective against more than one pesticide. For instance, many break down pesticides using new variants or higher levels of enzymes of a kind called P450s. These enzymes often protect against a range of different herbicides. In the 1980s, two weeds were found to be resistant to weedkillers that had never been used in the field. In other words, says Powles, weeds can evolve resistance to herbicides that have not even been developed yet.
The second story is Farm Antibiotics: 'Pig Staph' in a Daycare Worker, at Wired:
It’s been just about seven years since an alert epidemiologist in the Dutch town of Nijmegen identified an aberrant strain of MRSA, drug-resistant staph, in a toddler who was going in for surgery to fix a hole in her heart. The strain was odd because it didn’t behave normally on the standard identifying tests, and because it had an unusual resistance factor — to tetracycline, a drug that it should not have been resistant to, because the Netherlands had such low rates of MRSA that tetracycline wasn’t being used against the bacterium there.
Pursuing the source of the strain, researchers at Radboud University found it in the toddler’s parents and sister, and in the family’s friends. Not knowing where else to look, they asked what the parents and their friends did for a living; discovered they were all pig farmers; and went to their farms, and checked the pigs, and found it being carried by them, too. Suddenly, that strange resistance pattern made sense: The Netherlands uses more antibiotics in pig agriculture than any other country in the European Union, and the drug that it uses the most is tetracycline. Clearly, the aberrant strain — known as MRSA ST398 for its performance on a particular identifying test — at some point had wandered into pigs, become resistant to the drugs being given to the pigs, and then crossed back to humans, carrying that new resistance factor as it went.
From that first discovery unrolled the microbiological equivalent of a car-chase scene, complete with unpredictable turns, skids around corners, and unexpected dead ends. Researchers have identified ST398 in animals, people and retail meat in most of the EU; in pigs, farmers and hospital patients in Canada, and in pigs and a few farm workers, and most recently supermarket meat, in the United States. (You’ll find a long archive of posts on ST398, and more here.)
Both of these stories raise significant concerns about how we raise our foods.  They each also indicate that things may become more challenging in the near future, as we deal with glyphosate resistance and antibiotic-resistant bacteria.  Without even throwing in peak oil, I believe there will be no shortage of challenges in the future.

The Tea Party and Liberals Each Misrepresent the Founding Fathers

William Hogeland looks at the economic roots of the American Revolution and how various factions have appropriated what they want to support their causes, even if it is incorrect (h/t Yves Smith):
Yet despite constant appeals to founding values by politicians and pundits across the political spectrum, a perennial American eagerness to avoid framing our founding period in economic terms can make it strangely difficult to keep those all-important 18th-century finance issues in historical focus. The Tea Party movement, for example, has laid its claim on the founding period, and to a great extent that claim is indeed an economic and financial one. Casting the modern welfare state as a form of tyranny, in large part because of what they see as its excessive taxation, Tea Partiers invoke the famous American resistance to Parliament’s efforts to raise a revenue in the colonies without the consent traditionally given by representation. Seeing founding-generation American patriots as unified against British taxation (and frequently misrepresenting the politics even of the elites they invoke), the Tea Party defines its own anti-government, anti-tax values as essential to American identity.
The Tea Party thus edits out an alternative view of government that prevailed among the ordinary 18th-century Americans who were all-important to achieving independence. Those Americans opposed elites epitomized by the Boston merchant class, which the Tea Party, perhaps appropriately enough, so strongly identifies with. The internal struggle for American equality was as important to the founding as the high-Whig resistance to England, but the Tea Party can’t deal with the populist leaders and militia rank-and-file who wrote the socially radical 1776 Pennsylvania Constitution, or the Shaysites of Massachusetts who marched on the state armory, or the so-called whiskey rebels who inspired federal occupation of western Pennsylvania. American Revolutionary patriots all, those democratic-finance leaders had ideas about government’s role in ensuring economic equality that prefigured programs of the 19th-century Populists and the 20th-century New Dealers, the very programs the Tea Party wants to dismantle. Tea Party history therefore has to expunge the welfare state’s roots in America’s founding.
Liberals, too, can have a problem with the economic conflicts of the founding period. Alexander Hamilton’s national finance program, which Madison and Jefferson opposed with such intensity, was economically regressive. Under the influence of the founding financier Robert Morris, Hamilton made a stunningly successful effort to yoke American wealth to great national projects by beating down the popular-finance movement and promoting the interest (in both senses!) of the high-finance elites. Yet when some of today’s liberals look to Madison for support in critiquing Hamiltonian finance, they come up empty. Madison’s attacks on central banking represented anything but an argument for democracy and economic equality.
There is a lot more interesting stuff there, especially when it comes to the New Dealers claiming Jefferson's heritage in their reforms.  I've been struck by the irony of Republicans claiming the mantle of Lincoln, the savior of the Union, emancipator of slaves and supporter of federal grants for the transcontinental railroad and the Land Grant Universities, even though the party is now a states rights party, anti-civil rights, opposed to federal involvement in the economy, and with it base located in the former Confederacy.  Likewise, the Democrats claim Thomas Jefferson and Andrew Jackson, even though each would be anathema in today's Democratic Party. 

My favorite more recent example of a party claiming history it now has no business claiming is when Republicans claim that they are the party of civil rights, because liberal Northern (especially Northeastern) Republicans (find me a liberal Republican today) joined with LBJ to pass the Civil Rights Act over the opposition of segregationist Southern Democrats.  I've actually heard Rush Limbaugh make that claim.  He neglects to mention that most of those Southern Democrats became Republicans when Barry Goldwater ran in 1964 on throwing out the Civil Rights Act, and the national Republican party froze out the liberals in the Northeast, who became Democrats.  That is an amazing example of appropriating history which doesn't match reality.

Monday, May 9, 2011

Health Care Costs

From Business pundit via  the Big Picture:

Why Your Stitches Cost $1,500 - Part Two
Via: Medical Billing And Coding

The claim that doctors are overpaid is going to ruffle some feathers.  I would think that if large numbers of scholarships were available to doctors, we might be able to lower their annual pay once they are out of school, but paying off debts makes it much more expensive than necessary.  Unfortunately, the AMA has a century-long track record of keeping doctors from facing billing limits.

Making Money in Microseconds

Via Ritholtz, Donald McKenzie looks at computerized trading and high frequency trading algorithms:
Little of this has to do directly with human action. None of us can react to an event in a millisecond: the fastest we can achieve is around 140 milliseconds, and that’s only for the simplest stimulus, a sudden sound. The periodicities and spasms found by Hasbrouck and Saar are the traces of an epochal shift. As recently as 20 years ago, the heart of most financial markets was a trading floor on which human beings did deals with each other face to face. The ‘open outcry’ trading pits at the Chicago Mercantile Exchange, for example, were often a mêlée of hundreds of sweating, shouting, gesticulating bodies. Now, the heart of many markets (at least in standard products such as shares) is an air-conditioned warehouse full of computers supervised by only a handful of maintenance staff.
The deals that used to be struck on trading floors now take place via ‘matching engines’, computer systems that process buy and sell orders and execute a trade if they find a buy order and a sell order that match. The matching engines of the New York Stock Exchange, for example, aren’t in the exchange’s century-old Broad Street headquarters with its Corinthian columns and sculptures, but in a giant new 400,000-square-foot plain-brick data centre in Mahwah, New Jersey, 30 miles from downtown Manhattan. Nobody minds you taking photos of the Broad Street building’s striking neoclassical façade, but try photographing the Mahwah data centre and you’ll find the police quickly taking an interest: it’s classed as part of the critical infrastructure of the United States.
Human beings can, and still do, send orders from their computers to the matching engines, but this accounts for less than half of all US share trading. The remainder is algorithmic: it results from share-trading computer programs. Some of these programs are used by big institutions such as mutual funds, pension funds and insurance companies, or by brokers acting on their behalf. The drawback of being big is that when you try to buy or sell a large block of shares, the order typically can’t be executed straightaway (if it’s a large order to buy, for example, it will usually exceed the number of sell orders in the matching engine that are close to the current market price), and if traders spot a large order that has been only partly executed they will change their own orders and their price quotes in order to exploit the knowledge. The result is what market participants call ‘slippage’: prices rise as you try to buy, and fall as you try to sell.
It is legalized looting to allow market makers to take advantage of the data to take little amounts of money on vast numbers of shares, but try getting that practice banned.  It seems detrimental to this country that our brightest minds are being used to come up with trading algorithms to shave tiny amounts of money from retail traders and pension funds and deposit that in investment banker bonuses.

Does Cutting State Taxes and Expenditures Increase Growth?

Richard Florida looks at a new economic study:
A new study by Tulane's James Alm and Janet Rogers of Nevada's Department of Budget and Planning (h/t Ryan Avent, whose deadpan tweet noted that it was likely to spark a "lively discussion") takes a close look at the effects of tax and spending policies at the state level.  Entitled  "Do State Fiscal Policies Affect State Economic Growth?", it examines  50 years of data  (from 1947 to 1997),  tracking  the effects of state tax policies, spending policies, and political orientation on economic growth. Looking at the different policy approaches and strategies that have been pursued at the level of states and cities and comparing their results provides a useful lens through which to examine pressing national issues. Alm's and Rogers' main findings are certainly interesting; "lively" is quite likely an understatement for the sort of debate their findings should inspire.
There are two major take-aways. First, a "state's fiscal policies have a measurable relationship with per capita income growth, although not always in the expected direction." Tax impacts, they report, are "quite variable"; "expenditure impacts are more consistent."
Second, they find "moderately strong evidence" that a "state's political orientation, as indicated by whether the governor is Republican or Democrat, whether the state has enacted tax and expenditure limitation legislation, and whether the state frequently elects a governor of the same party as the incumbent, have consistent, measurable, and significant effects on economic growth."  And then they drop their bombshell: "Having a Republican governor," they conclude, "is associated with lower rates of growth." They qualify their conclusions slightly--but only slightly--noting that past measurement errors may have introduced some distortions into the record.
Taken together, these findings seem to support the spending orientation favored by liberals and pose a rather stark challenge to Republican governors who are embracing austerity.
In the current political environment, any data may run into a chicken or egg problem.  Midwestern states which have lost large numbers of manufacturing jobs have been losing young people for years.  Their populations are aging, and have fairly low college graduation rates, their economies are struggling.  It might be more of an issue of demographics leading to Republicans getting elected, in which economic growth is already stagnated.  Then when the Republicans start pushing through their gay marriage bans and abortion restrictions, they drive away even more young people.  It is an interesting concept, though. 

Taxes in the U.S.

Matthew Yglesias includes the following chart in his post about whether the U.S. can preserve Medicare as currently constituted:

One thing to note is that each of those other countries has some sort National Health System which covers more people than our government does.  Once you figure in the privately funded portion of our health care system, which could truly be looked at as a privately administered tax which is paid to health insurance companies, doctors, hospitals and malpractice insurance providers, we would probably move up on the list a decent amount.  Also, imagine how low our taxes could be if we didn't carry the burden of defending all these other developed world countries who spend very little on defense.

NCAA Men's Lacrosse Tournament

Last year's finalists, Notre Dame and Duke, could meet in the second round.  Syracuse is the #1 seed.  Notre Dame and Denver are the only teams in the tournament who aren't located in New York and west of the Appalachian Mountains.  Catch the action on ESPNU.

Chinese Food Safety and the Political Class

James Fallows notes that China may face some real muckraking reform, or maybe not:
- From China Geeks, which translates material from the Chinese press and blogosphere, an English version of a very important story from Southern Weekend,  南方周末, as fearless a reform publication as you will find in China, about a true "let them eat cake" saga underway there now.

At a time when tainted-food scandals are erupting all over the country, the story describes a special farm and food-supply system for government bigshots, to spare them exposure to the heavy-metal laden, adulterated, and otherwise contaminated food the rest of the population ingests. People often compare early 21st century China to early 20th century America, when industrial abuses gave way to the Muckraking and Progressive era. We'll see whether reformers can get similar traction there. If you want an idea of what makes ordinary people in China angry, check out this story.

Wow, that has tremendous potential to bring about massive reform, or it may bring a government crackdown on such media outlets.  Heavy-metal laden, adulterated and otherwise contaminated food.  That is a disturbing situation in a country with 16% or so of the world's population.

Naked Capitalism Link of the Day

Today's link: Food inflation, land grabs spur Latin America to restrict foreign ownership, at the Christian Science Monitor:
One of the first things passengers see when disembarking at Cuiaba airport in central Brazil is a real estate advertisement promoting arable land to foreigners.
South America has some of the most productive land on the planet, and buyers have long been drawn to pastureland for cattle; fields for grains, soybeans, and sugar cane; and forests where they can plant eucalyptus for timber and paper. Farms can reach the size of small nations.
Such advertisements may soon be preaching to an empty audience, however, as this and other South American nations that traditionally welcomed foreign investors are now changing land laws to restrict foreign ownership as arable areas worldwide become more sought after, a fact underlined by recent food crises. For lawmakers in Brazil, Argentina, and Uruguay, a nation where an estimated 25 percent of all land (an area the size of Denmark) already sits in foreign hands, it isn't a moment too soon to roll back the welcome mat.
These three nations produce much of the world's beef and grains and have been attractive to investors not just because land is available, but also because buying it was relatively straightforward.
Newly concerned over land grabs and eager to exercise more control over its food security, Argentinean Pres­ident Cristina Fernández de Kirch­ner said April 27 she would send a bill to Congress restricting how much land foreigners can buy or own. Uruguay fears that nations such as China and Saudi Arabia want to buy prime real estate and has promised to clamp down. Brazil, the world's biggest producer or exporter of beef, coffee, sugar cane, orange juice, and tobacco, last year blocked foreign companies based in Brazil from purchasing additional local real estate.
There was a big push ten years ago for U.S. farmers to go down and buy land in Brazil.  It economically made sense, but I couldn't see moving down there permanently to farm in a foreign land.  Guys who got involved were making a killing, but there was a lot of risk involved also.  I'm not surprised they are clamping down, and would anticipate laws in some Corn Belt states limiting corporate ownership.  Things are going to be very interesting in the near future.

There is also an interesting story about Ireland's alleged plans to restructure its debts to the EU and the IMF within 3 years.

Bush-era War Criminals Continue Claiming Torture Located Bin Laden

Barry Ritholtz takes the offensive against the torture works meme.  He highlights Dan Froomkin making the case that torture slowed down the investigation:
Indeed, as Dan Froomkin notes in a little-noticed essay, torture actually delayed by years more effective intelligence-gathering methods which would have resulted in finding Bin Laden:
Defenders of the Bush administration’s interrogation policies have claimed vindication from reports that bin Laden was tracked down in small part due to information received from brutalized detainees some six to eight years ago.
But that sequence of events — even if true — doesn’t demonstrate the effectiveness of torture, these experts say. Rather, it indicates bin Laden could have been caught much earlier had those detainees been interrogated properly.
“I think that without a doubt, torture and enhanced interrogation techniques slowed down the hunt for bin Laden,” said an Air Force interrogator who goes by the pseudonym Matthew Alexander and located Abu Musab al-Zarqawi, the leader of al Qaeda in Iraq, in 2006.
It now appears likely that several detainees had information about a key al Qaeda courier — information that might have led authorities directly to bin Laden years ago. But subjected to physical and psychological brutality, “they gave us the bare minimum amount of information they could get away with to get the pain to stop, or to mislead us,” Alexander told The Huffington Post.
“We know that they didn’t give us everything, because they didn’t provide the real name, or the location, or somebody else who would know that information,” he said.
In a 2006 study by the National Defense Intelligence College, trained interrogators found that traditional, rapport-based interviewing approaches are extremely effective with even the most hardened detainees, whereas coercion consistently builds resistance and resentment.
I would think that an examination of human nature would tell you that would be the case.  When your enemies resort to torture, they are proving your belief in their inherent evil.  It becomes heroic in your mind to resist them as much as possible.  Because you are suffering physical pain, you have to tell them things, so you make stuff up.  They can't know what is true and what isn't, so they have to try to confirm these stories, leaving you with time to embellish more, and come up with reasons for why they couldn't confirm what you'd told them. 

Whereas, treating the detainees with respect, trying to build trust, undermines the detainee's belief in his enemy's inherent evil.  It is likely that long exposure to the "enemy" will humanize him and convince the detainee that he and the interrogator aren't as far apart as previously believed.

The fallacy of the "ticking time-bomb" scenario which torture proponents use to soften opposition to torture is that if a detainee has information of an "imminent" attack, you need to know the anticipated timing of the attack, which you likely don't, and the detainee must be forced to give up the information quickly.  He actually knows how long he must resist torture to allow the attack to go off, and he knows the factual information about the attack, which you don't.  He can send your manpower off on wild-goose chases in a situation in which time is of the essence.  In other words, the situation in which torture advocates try to prove the necessity of torture is actually the least-likely time in which torture would ever work.  The person being tortured holds all the cards, and in his mind is engaged in a noble struggle against evil opponents.  The torturer is making it less likely that he will get his information.  So far, I have not seen any evidence that utilizing tactics used by tyrants throughout history to get forced confessions from political opponents has ever produced usable intelligence anywhere outside of the obviously fantasy world of 24, where one man is able to stop years of planning in a single day.  Dick Cheney and his henchmen should be tried for their crimes.

Update:  Andrew Sullivan discusses Cheney's campaign:

May 9, 1941, British Capture Enigma Machine

Brad DeLong, quoting Wired:
May 9, 1941: German Sub Caught With the Goods: 1941: British destroyers capture a German submarine, U-110, south of Iceland. The British remove a naval version of the highly secret cipher machine known to the Allies as Enigma, and then they let the boat sink -- to keep the fact of their boarding secret. The Enigma machine, used by the Kriegsmarine to encode and decode messages passing between shore command and ships at sea, was taken to Bletchley Park in England, where cryptographers including computer pioneer Alan Turing succeeded in breaking the naval code. The Germans, assuming U-110 had foundered with her secrets intact, failed to realize that their code was broken. The subsequent information passing before British eyes helped the Allies enormously in the Battle of the Atlantic.
Several versions of the Enigma machine existed, but the working principle -- a rotor system activated using a keyboard -- was the same. The machine itself had been around since the early 1920s and was used by other nations, too, although it is most closely associated with Nazi Germany. The Enigma used by the German army was decrypted as early as 1932 by Polish cryptographers, who later passed their methodology along to the British and French. In light of subsequent events (the Germans drove a Franco-British expeditionary force out of Norway and then crushed the French in a six-week campaign in 1940), the military value of this early intelligence is debatable.